![]() ![]() Many crypto fans have already turned their attention to other projects. During a drawdown, however, it was thought that the opposite would happen, though that hasn't been the case this time around. In earlier instances, analysts considered that the coin's dominance would fall during a bull market as smaller projects gained attention. The researchers also noted that Bitcoin's market dominance has in the past been used as a gauge of figuring out the stage of the market cycle. “This may suggest volumes have become stickier despite the downturns - or we are due for further decline in activity,” the report said. In 2022, they've fallen 35% since their top last year. However, CryptoCompare points out that volumes haven't deflated as much as they had in the rout that started in 2017, when they dropped more than 60% from peak to trough. In this environment, retail investors have been more reticent to step into the space in the same way they had over the first two pandemic years, while high-adrenaline traders have found it harder to partake in trades that in the past had worked much better. Bitcoin has been hovering around $20,000, way off its 2021 highs of nearly $69,000. While all manner of riskier assets have been stuck in the gutter this year as central banks around the world raise interest rates to tamp down inflation, cryptocurrencies have been hit especially hard. “Under the context of the current market, we believe it's possible for a high-stress event to take place in the traditional financial system, which would cause sell-side pressure across major asset classes, leading to a spike in volatility and a potential move downwards,” CryptoCompare said. Meanwhile, during the last bear market, average annualized volatility for Bitcoin was 79%, a measure that's right now hovering around 63%. That leaves “room for 2022 to become the worst drawdown in Bitcoin's history,” they wrote. 31, meaning that it hasn't been as “acute” in terms of time frame and severity as those prior declines. This time around, Bitcoin has fallen 73% and we're at 357 days as of Oct. ![]()
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